Accountable Plan Overview and Explanation

Accountable Plan

What is an Accountable Plan?

An accountable plan is to reimburse an employee for the expense he has done for the business. There are certain guidelines for an accountable plan, the reimbursement can not be calculated as personal income. So you can not include this in the withholding tax or W-2 reporting.


How an Accountable Plan Works

There are specific differences between an accountable plan and a non-accountable plan. A plan that doesn't follow the requirements of the IRS is a non-accountable plan. And reimbursement that is provided according to the non-accountable plan is subject to withholding tax and W-2 form.



According to the IRS, the only expense that is business-related can be reimbursed. And if the reimbursement that is given to the employee is higher than the expense that is actually needed then the extra amount should be returned to the organization within a timeframe.

Requirements for an Accountable Plan

  • Expenses should be connected to the business.
  • Employees must submit an expense report within a specific time.
  • The excess amount of money should be repaid within 120 days of the original reimbursement.
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